Assertion Reason MCQs of Issue of Debentures class 12 with answers
Assertion Reason MCQs of Issue of Debentures class 12 with answers
Let’s Practice
Assertion (A): Debenture Certificate evidences that the company has borrowed amount from the Debentureholder.
Reason (R): Debenture is the written acknowledgment by a company of debt.
In the context of above statements, which of the following is correct?
(a) Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).
(C) Only Assertion (A) is correct.
(d) Both Assertion (A) and Reason (R) are incorrect
Ans – (b)
Assertion (A): Debentures can not be issued at discount whereas shares can be issued at discount.
Reason (R): The Companies Act, 2013 does not allow issue of shares at discount unless they are issued as ESOPs. It does not restrict issue of debentures at discount.
In the context of above statements, which of the following is correct?
(a) Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).
(c) Assertion (A) is incorrect, but Reason (R) is correct.
(d) Both Assertion (A) and Reason (R) are incorrect.
Ans – c)
Assertion (A): Application Money on debentures issued may be collected in lumpusm or in instalments as is decided by the company.
Reason (R): Application Money received in lumpsum is credited to Debentures Application and Allotment Account whereas application money received when issue price of debentures is received in instalments is credited to Debentures Application Account.
In the context of above statements, which of the following is correct?
(a) Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).
(C) Only Assertion (A) is correct.
(D) Both Assertion (A) and Reason (R) are incorrect.
Ans – (a)
Assertion (A): A company has issued 1,00,000, 8% Debentures of ₹ 200 each to a bank as collateral security. It may or may not record it in the books of account by passing a Journal entry.
Reason (R): Journal entry passed by the company will be:
Debenture Suspense A/c Dr. ₹ 2,00,00,000
To 8% Debentures A/c ₹ 2,00,00,000
In the context of above statements, which of the following is correct?
(a) Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A)
(c) Only Assertion (A) is correct.
(d) Both Assertion (A) and Reason (R) are incorrect.
Ans – a)
Assertion (A): Discount or Loss on issue of Debentures is written off in the year debentures are allotted.
Reason (R): Discount or Loss on Issue of Debentures is written off in the year debentures are allotted from Securities Premium (if it exists0 and/or from Statement of Profit & Loss as finance cost.
In the context of above statements, which of the following is correct?
(a) Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).
(c) Only Assertion (A) is correct.
(d) Both Assertion (A) and Reason (R) are incorrect.
Ans – a)
Assertion (A): Interest on Debentures is payable to Debentureholder by the company whether the company earns profit or incur loss.
Reason (R): Interest on Debentures is an expense, i.e., charge against profit to be paid irrespective of the fact that the company has incurred loss.
In the context of above statements, which of the following is correct?
(a) Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).
(c) Only Assertion (A) is correct.
(d) Both Assertion (A) and Reason (R) are incorrect.
Ans – b)
Assertion (A): Alok Ltd. issued 1,000, 9% Debentures of ₹ 1,000 each at a premium of 25%. 9% Debentures Account will be credited by ₹ 10,00,000.
Reason (R): Debentures Account is credited by the amount received for the debentures issued. Hence Debentures Account will be credited by ₹ 12,50,000.
In the context of above statements, which of the following is correct?
(a) Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).
(c) Only Assertion (A) is correct.
(d) Both Assertion (A) and Reason (R) are incorrect.
Ans – c)
Assertion (A): Interest is paid by the company on Debentures issued as Collateral Security.
Reason (R): Interest is paid by the company on Debentures, including debentures issued as collateral security.
In the context of above statements, which of the following is correct?
(a) Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).
(c) Only Assertion (A) is correct.
(d) Both Assertion (A) and Reason (R) are incorrect.
Ans – d)
Assertion (A): Pilot Pens Ltd. issued 10,000, 7% Debentures of ₹ 100 each at par redeemable at a premium of ₹ 6 after 5 years. It has balance in Securities Premium of ₹ 20,000 and ₹ 10,000 in Capital Reserve Account. It will write off balance Loss on Issue of Debentures of ₹ 40,000 from Surplus, i.e., Balance in Statement of Profit & Loss.
Reason (R): Balance Loss on Issue of Debentures, i.e., ₹ 40,000 will be written off from Statement of Profit & Loss.
In the context of above statements, which of the following is correct?
(a) Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).
(c) Only Assertion (A) is correct.
(d) Assertion (A) is not correct, but Reason (R) is correct.
Ans – d)
